​Russia reported to be cancelling duty–free trade with Ukraine

The duty-free trade deal between Russia and Ukraine is coming to an end. Russia says fundamental changes mean that it will invoke Article 62 of the Vienna Declaration to terminate the understanding.

The move comes as Russia
insists it needs to protect domestic markets after Ukrainesignedthe Association Agreement on June
27, which gives Kiev duty-free trade status with the European
Union.

The cancellation of the duty-free relationship with Ukraine will
lead to higher import tariffs of around 7.8 percent.

“The circumstances that existed in the time when the CIS free
trade area agreements were signed have significantly changed for
Ukraine which is historically the main trade partner of Russia
being deeply integrated in many areas of the economy,” RIA
quotes a source from the government familiar with the situation.

Ukraine is already facing recession and may see its economy
shrink by as much as a further 2 percent should Russia halt trade
as the dispute widens between the two ex-Soviet partners,
according to Prime Minister Arseniy Yatsenyuk.

Trade relations between Ukraine and Russia are “getting
worse,” Yatsenyuk said in an interview to Bloomberg. “We
do not have any kind of real relationship. We have the war. It
will severely hamper Ukrainian gross domestic product.”

This year Ukraine's GDP may fall by 6.5 percent, according to new
government forecasts and the IMF, in May the forecast was for a 5
percent reduction.